Expanding upon a previous project in HRM, this thesis examines whether conflict between managers andemployees is inherent in their relationship, and as such caused by, for example, their differences in powerand interests, or if conflict is engendered by a management style characterized by hard HRM-practices andnegative social capital. Some scholars suggest that conflict is inevitable in a corporate setting. Others suggestthat hard HRM-practices cause mistrust and conflict, whereas soft HRM-practices build trust and lead tobetter cooperation across the organizational hierarchy. However, how and to what extent does this work?Answering these questions in this thesis is accomplished by conducting a case study, interviewingand observing at one Danish slaughterhouse. Six individual interviews, of approximately 45 minuteseach, were conducted. The informants include both managers and shop floor employees. These are thefactory manager, the shop steward, three spokesmen and the safety supervisor – all are from different departmentsof the slaughterhouse and have been working in this factory for 20 to 40 years. Observation wasconducted during a meeting between the factory manager, EHS-supervisors and a few employee representatives,and participant observation was conducted between interviews while waiting for the next informant,during a tour around the inside of the factory and while eating lunch with the employees in the canteen.They are experiencing a lot of competition from Germany and Poland, where production canbe done at a significantly lower cost, which is why a lot of animals are sent to be slaughtered there. Becauseof this, they are experiencing a shortage of economical resources, and this creates tension between managersand employees. Most of their conflicts currently revolve around pay cuts. In order for the slaughterhouse tosurvive with this kind of competition, they must save money wherever possible, but the employees feel thatthey are already under a lot of pressure, being forced to work faster for dwindling pay.40 years ago, the local management was characterized by hard HRM-practices. The employeeshad no voice beyond their trade union back then. As such, the employees had little choice but to go on strike,when they were dissatisfied with their working conditions. They had a lot strikes back then, but have only afew now. The executive management, which is characterized by hard HRM-practices, now threatens employeeswith layoffs, if they go on strike, or are otherwise openly critical of the executive management. Since theemployees can’t very well get a job elsewhere, they are forced into silence. However, the local management,which is now characterized partly by soft HRM-practices, has fostered trust between the factory managerand the employees – through dialogue and the sharing of information they experience much fewer strikesnow and overall less strife between them. Locally, today, conflicts are resolved much more constructively.The conclusion drawn here is that conflict between managers and employees is, not either-or,but both inherent and engendered. There are internal and external causes for conflict beyond HRM-practices,but HRM-practices and social capital are of great importance to the level of these conflicts that will, perhapsinevitably, occur. When employees have no voice, they have little choice but to strike, resulting in a high levelof conflict. When employees are met by significant threats and sanctions, conflict can be suppressed, but notresolved. With soft HRM-practices and positive social capital, however, utilizing dialogue and sharing information,based on a foundation of mutual trust, most all disagreements between managers and employeescan be handled more constructively, resulting in a more optimal level of conflict. Intermediate managers playa key role in this, reconciling the demands of top managers with the needs of the employees. Corporationscould thus benefit from transitioning to softer HRM-practices and from developing positive social capital.